Property rights in space: The debate has begun

OPINION:

On July 31, an important article appeared in the Wall Street Journal: “From Lunar Landing to Lunar Land Rights: Establishing Property in Space Is Crucial to Unlocking Its Economic Potential.”

It was written by John Chisholm and Dan Garretson. The authors write: “At the lunar south pole, mines may someday harvest ice for rocket propellant, avoiding Earth launch costs. To attract investment, miners will need legal acknowledgment of first and continuous occupation, control over land use, the ability to exclude others and assurance that land and improvements can be sold or transferred. In short, ownership rights to lunar real estate. Property rights typically co-evolve with commercial activity: An initial legal floor enables activity, experience exposes gaps, and law hardens provisional practice into financeable rights. Homesteaders fenced and plowed the American West; Congress later codified their claims into law. Lunar property rights will likely follow the same path.”

It is very encouraging that the debate over property rights—a central theme of my book “New Space Capitalism” – is now entering the public arena.

The Outer Space Treaty (OST 1967) established the primary international legal framework for all activities conducted in outer space. The decisive factor in determining whether private property rights apply is Article II. Legal scholars have put forward differing viewpoints on its interpretation. The primary area of contention concerns the “prohibition of appropriation” and whether it applies only to the states expressly mentioned in the Treaty or also to private individuals and companies not mentioned in Article II.

Some legal scholars argue that appropriation by private individuals is prohibited because private ownership would infringe upon the freedoms of access, exploration, and use guaranteed to all states in Article I. I take the opposite view. I believe that national sovereignty stops where outer space begins, which means that national appropriation of the Moon, other planets, and asteroids is forbidden—but not the private ownership of celestial bodies.

This interpretation is supported by the legal doctrine expressio unius est exclusio alterius: The explicit mention of one thing implies the exclusion of others. If, for example, a statute or treaty expressly mentions one or more things of a class, it is only reasonable to conclude that others of the same class remain unrestricted by that statute or treaty.

The ambiguity of the OST stems from the priorities of the United States and the Soviet Union at the time of the Treaty’s drafting. Their primary focus was on preventing an arms race in space and the deployment of weapons of mass destruction there. The concept of private space companies, including business models that would allow private companies to engage in space mining, was a distant prospect in 1967.

No one could have imagined that just a few decades later, multibillionaires such as Elon Musk and Jeff Bezos would be able to drive humanity’s expansion into space through their privately funded companies. Consequently, the issue of private ownership was secondary for both nations. They did what governments often do when negotiating international treaties: They deliberately used vague language and left contentious issues unresolved. That is precisely what creates the difficulties of interpretation today.

I believe we will witness a situation similar to the settlement of the American West, when squatters created facts on the ground and appropriated land that was only later legalized through the Homestead Act and other legislation.

In my book “New Space Capitalism,” I ask: “Who should have the right to acquire property in space?” My answer is simple: those who have the financial means to get there, who are willing to bear the risks, and who develop and use the land.

For instance, if SpaceX succeeds in reaching Mars and begins building permanent settlements on the Red Planet, the ownership of land should initially go to SpaceX. Not the entire planet, of course, but a practicable area—for example, the size of Singapore. The surface area of Mars is about 200,000 times that of Singapore, so SpaceX would initially own only 0.0005 percent of Mars. That would be enough to develop multiple settlements, while leaving ample room for others.

SpaceX could finance its transportation and development costs by placing the land on Mars into a real estate investment trust (REIT). The market would then determine its value. Everyone could become an owner of land on celestial bodies.

As far as asteroids are concerned, at least for smaller celestial bodies, ownership could be granted to those capable of mining and extracting resources such as water and platinum. I believe the best solution would be to list the entire asteroid on the stock exchange as a REIT. This would finance mining operations and allow shareholders to receive dividends from the extracted resources.

Even before a single dollar had been earned—or a single cent in dividends had been distributed—a market for trading such shares could already emerge.

• Rainer Zitelmann is the author of the book “New Space Capitalism.”